GLOBAL TRANSACTION MONITORING SOFTWARE MARKET FORECAST 2020-2028

GLOBAL TRANSACTION MONITORING SOFTWARE MARKET FORECAST 2020-2028

Inkwood Research estimates that the global market for transaction monitoring software will register growth at a CAGR of 14.10% during the forecast period and will reach revenue of $29.530 billion by 2028. The base year considered for the market study is 2019, and the forecasted period is between 2020 and 2028. In the recent past, advance analytics has been the main feature of data science using tools that focus on predicting future events, trends, and behaviors.

Inkwood Research estimates that the global market for transaction monitoring software will register growth at a CAGR of 14.10% during the forecast period and will reach revenue of $29.530 billion by 2028. The base year considered for the market study is 2019, and the forecasted period is between 2020-2028.

In the recent past, advance analytics has been the main feature of data science using tools that focus on predicting future events, trends, and behaviors. There has been an increase in the use of advance analytics by various financial and banking institutions for monitoring high-risk activities, which is the key factor driving the growth of the transaction monitoring market. Advanced analytics is applied in transaction monitoring to detect and monitor specific risks, which cannot be detected by traditional methods. For example, advanced transaction monitoring helps in identifying financial crimes and various suspicious and terrorist financing activities. Moreover, most financial institutions use rules-based transaction monitoring and KYC systems to fight money laundering, which has many disadvantages, such as producing a high percentage of false reports and detecting zero cyberattacks. This, in turn, has increased the adoption of advance analytics such as AI, data science, and machine learning in transaction monitoring solutions to identify various risk activities. Hence, the adoption of AI and machine learning in transaction monitoring drives the growth of the market.

Anti-money laundering dominates the global transaction monitoring software market in terms of revenue, with around 31.09% market share in 2019. The growing incidences of financial crimes, such as terrorist financing and various money laundering events has led to a growing need for organizations to deploy AML transaction monitoring solutions for the detection of suspicious activities, which has been a major factor driving the growth of the global anti-money laundering market. In addition, ongoing improvement in banking and financial systems to enhance their security features has led them to spend more on their IT infrastructure and adopt AML software, which, in turn, drives the growth of the market.

Moreover, the compliance management segment is anticipated to record the highest CAGR of around 16.87% during the forecast period. The increasing cost of money laundering fines is the major factor that drives the adoption of compliance management solutions. For instance, more than $26 billion fine was imposed for non-compliance with AML, KYC, and sanction regulations in the last decade. Such a high amount of fine has promoted the adoption of compliance management solutions in recent years. In addition, regulatory compliance, as well as compliance frameworks and standards, have generated a significant demand for compliance-related technology for banking operations.

The global transaction monitoring software market growth is restricted by the lack of skilled professionals, difficulties in managing cross-border, and multi-jurisdictional AML-compliance. The major problem that hinders the transaction monitoring market is the difficulties in managing cross-border and multi-jurisdictional AML-compliances due to lack of regulatory and data standardization. The financial institutions are struggling to supervise regulatory compliance and entity data management obligations throughout multiple jurisdictions. Furthermore, the lack of standard rules and regulations across the globe has led to an increase in money laundering cases. However, money laundering has become the main reason for various governments to apply stringent compliance. For instance, in the year 2019, the United Nations Office on Drugs and Crime estimated that approximately 2-5% of GDP is laundered each year globally, which leads to a higher number of money laundering cases across the globe, thereby restricting the market growth.

In 2019, North America garnered the largest market share of 37.47% in terms of revenue. The dominance of North America is attributed to the presence of a majority of the key players that are offering their services and solutions in the region. These include SAS Institute, Oracle Corporation, Hewlett-Packard Enterprise, Thomson Reuters Corporation, and others. The factors motivating the growth of the transaction monitoring market in this region include the increasing number of transaction frauds, money laundering, terrorist funding, financial theft, and data theft. In addition, the increasing initiatives by organizations to minimize financial crimes boost the market growth of the region.

On the other hand, Asia Pacific is anticipated to be the fastest-growing region with a CAGR of 15.85% during the forecast period. The banking and finance industry of this region has evolved rapidly, in terms of adoption of using upgraded tools and technologies for seamless operations. This, in turn, boosts the growth of the transaction monitoring market in this region. In addition, the increasing financial frauds and corruption in the banking sector in countries such as India and China are expected to create lucrative opportunities for the market. For instance, according to a study conducted by RBI in 2018, in India, there has been an increase of 15% in banking frauds compared to 2017. Furthermore, different complexities in transaction processing systems in various organizations create lucrative opportunities for the transaction monitoring market in this region.

Some of the major players involved in the global transaction monitoring software market are:

Oracle Corporation

SAS Institute Inc

BAE Systems

Fair Isaac Corporation

Others

Key strategies adopted by some of the transaction monitoring software companies are:

In November 2019, FICO introduced FICO Identity Proofing, allowing organizations to digitally bring new customers onboard without requiring personal verification, and FICO User Authentication that includes behavioral authentication, biometric, and multifactor. In January 2020, FIS announced its entry into Africa for Payment Processing using Worldpay from FIS. This will help the merchants and ecommerce sector highly-secure online payment processing.